by Intuit•12• Updated a day ago
Learn how to return a part of a security deposit.
If you post security deposits you receive to a liability account, when you have to refund part of a security deposit, you must first issue a check for the portion to be refunded and record an invoice for the remaining amount, and then enter a credit memo/adjustment to correct the liability account and to zero out the tenant balance.
| Note These steps are only applicable if you use a liability account for security deposits. |
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Step 1: Write a check for the amount to refund
You can start the process of refunding part of a security deposit by issuing a check for the portion to be refunded.
To issue a check:
- Select +New.
- Under Vendors/Vendors, select Check.
- Enter the check information.
- In the Account details section, select the liability account you use for security deposits from the Account column dropdown list.
- Select Save and close.
The next step is to create any necessary product or service items you will need to create an invoice for the un-refunded portion of the deposit.
Step 2: Create a product or service item
To create the necessary product or service item to use on the invoice:
- Go to Settings .
- Under Lists, selectProductsand services.
- Select New.
- From the Product/Service information panel, select the appropriate type of item to create.
- Enter the product or service information for the item.
- Select Save and Close.
The next step is to use the product or service items you created to enter an invoice for the portion of the deposit you are not returning.
Step 3: Create an invoice
To create an invoice for the un-refunded portion of the deposit:
- Select +New.
- Under Customers, choose Invoice.
-
- Selectthe item you created from the drop-down list in the Product/Service field.
- Enter the amount of the portion of the deposit you are not returning in the Amount field.
- Select Save and close.
Once you have created the invoice, the next step is to enter a credit memo for the amount that is not being refunded.
Step 4: Enter a credit memo
To enter a credit memo for the un-refunded amount:
- Select +New.
- Under Customers, selectCredit Memo.
-
- Selectthe item you created from the drop-down list in the Product/Service field.
- Enter the amount that is not being returned to the tenant in the Amount field.
- Select Save and close.
Once the credit memo is created, the next step is to apply the credit to the invoice you created.
Step 5: Apply the credit to the invoice
To apply the credit to the invoice:
- Select +New.
- Under Customers, choose Receive Payment.
-
- Verify that the credit and invoice are both selected, and that the amounts are equal.
If you don't see the credit and the invoice, they have been automatically applied, and you can select Cancel to skip this part of the process. - Select Save and close.
The tenant and the liability account both now have a zero balance.
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FAQs
If you post security deposits you receive to a liability account, when you have to refund part of a security deposit, you must first issue a check for the portion to be refunded and record an invoice for the remaining amount, and then enter a credit memo/adjustment to correct the liability account and to zero out the ...
How to refund a customer deposit in QuickBooks Desktop? ›
In QuickBooks Desktop, select the Customers menu and then Credit Memos/Refunds. In the Customer:Job dropdown, select the customer you need to refund. Enter the products and services you need to refund. When you're done, select Save & Close.
How do you issue a refund in QuickBooks Online? ›
Select Transactions, then select the All sales tab. Select the sales receipt, invoice, or payment you want to apply a refund to. In the footer, select More, then select Refund. Review the transaction info, then select Save and close.
How do I record a refunded security deposit? ›
Since a refundable deposit is cash that must be returned to the customer in the future, the company should debit restricted cash and credit the customer deposit liability account. When the deposit is returned to the customer, the customer deposit liability account is debited, and restricted cash is credited.
Is refundable security deposit an expense? ›
Is returning a security deposit an expense? No. Returning a refundable security deposit that you previously received from a tenant is not an expense. You refund money paid as a security deposit at the end of the lease provided that the terms of the lease are met.
What is a refundable security deposit? ›
Refundable Security Deposit is the sum agreed between the Owner and the Agent; a returnable deposit payable by the Guest to cover any breakages, damages or minor repairs to the Property which may be incurred during the Holiday Let.
How do I write a letter to return my security deposit? ›
What to Include in a Security Deposit Demand Letter
- the address of your rental and the dates you rented from.
- how much you paid for a security deposit.
- why you are entitled to a return of a portion or all of the deposit.
- the state laws that require a return of the deposit in a timely manner.
How do I get my refund deposit back? ›
Your landlord or letting agent can only take money off if there's a good reason - for example if you've damaged the property. You'll need to contact your landlord at the end of your tenancy and ask them for your deposit. If your home is managed by a letting agency, you'll need to contact them instead.
How to handle security deposits in QuickBooks? ›
How to Record a Security Deposit in QuickBooks?
- Step 1: Set Up a Liability Account for Security Deposits. ...
- Step 2: Record the Security Deposit as a Liability. ...
- Step 3: Record the Security Deposit as an Income. ...
- Step 4: Create a Memorized Transaction for Future Security Deposits.
How to refund an overpayment to a customer in QuickBooks Desktop? ›
Here's how:
- Go to the Customers menu at the top, then choose Customer Center.
- Select the Customer, then look for the payment you recorded.
- Open the invoice payment.
- Under the OVERPAYMENT section, tick the option REFUND THE AMOUNT TO THE CUSTOMER.
- Then, hit Save & close.
- Confirm the changes by clicking Yes.
- Select + New.
- Select Credit card credit.
- In the Payee field, select the appropriate vendor.
- From the Bank/Credit account ▼ dropdown, select the credit card where you received the refund to.
- Enter the Payment date, refund Amount, Tax and Category. ...
- Select Save and close.
What account type is a refund in QuickBooks? ›
In QuickBooks, the most appropriate category for tax refunds is typically an income account specifically designated for refunds. The category name often depends on the type of tax being refunded, such as “Income Tax Refunds” for refunds of income taxes or “Sales Tax Refunds” for refunds of sales taxes.
How do I reconcile a refund in QuickBooks Online? ›
Reconciling Credit Card Refunds
- Go to the Banking menu.
- Within the Banking tab, find the deposit you want to match.
- Select Find match.
- Select all the invoices/transactions.
- Once you select the transaction, scroll to the bottom of the table and click Resolve difference on the right.
What is the journal entry for a refund? ›
When merchandise purchased for cash is returned, it is necessary to make two journal entries. The first entry debits the accounts receivable account and credits the purchase returns and allowances account. The second entry debits the cash account and credits the accounts receivable account.
How do I reverse a deposit in QuickBooks Online? ›
Click the "Record Deposits" icon on the QuickBooks homepage, or click the "Banking" menu and select "Make Deposits." Click "Cancel" if the Payments to Deposit window opens. Click "Previous" to move through the transactions until you find the deposit or payment from a deposit that you want to remove.
How do I handle security deposits in QuickBooks? ›
How to Record a Security Deposit in QuickBooks?
- Step 1: Set Up a Liability Account for Security Deposits. ...
- Step 2: Record the Security Deposit as a Liability. ...
- Step 3: Record the Security Deposit as an Income. ...
- Step 4: Create a Memorized Transaction for Future Security Deposits.